Citation:

Impact/Purpose:

This briefing paper seeks to convey research results to a wider policy-relevant audience, via posting on the E3 Foundation website.

Description:

Mitigation and adaptation are the two key responses available to policymakers to reduce the risks of climate change. We model these two policies together in a new DICE-based integrated assessment model that characterizes adaptation as either short-lived flow spending or long-lived depreciable adaptation stock investments. Modeling results show that, although stock adaptation has a distinct advantage over flow adaptation for the simple reason that it is able to lower damages over a longer time period, the optimal portfolio of strategies is a combination of mitigation, flow adaptation, and stock adaptation. We demonstrate that the strategic tradeoff between mitigation and adaptation depends critically on the relative ratio of stock adaptation to flow adaptation, and that this ratio is driven primarily by the degree of substitutability between the adaptation types, the relative shares of stock versus flow (representing the relative effectiveness in the baseline), and on the existence of physical limits on damages that can be reduced by flow-type investments. The exploration of tradeoffs between adaptation and mitigation requires this disaggregation of adaptation by its dynamic properties.